How to Trade the US Indices with Binary Options

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Trading US Indices

One category of assets that can be traded in the binary options market is the stock indices. The stock index is the asset derivative of the stock exchange on which stocks are traded. In today’s article, we will focus on the major American index; the Dow Jones.

Of the three American indices, the Dow Jones stock index is the one that mirrors the American economic and trading sentiment. The NASDAQ is a composite of stocks of top 100 companies in the technology and pharmaceutical sectors, and includes stocks of foreign companies. As a result of this composite mix, its price action is not truly reflective of the state of the American economy, which is the fundamental ingredient we want to trade.

Trading the Dow Jones Index

Before starting to trade the DJ30 index as a binary options asset, it is pertinent for traders to know that this asset is not open for trading 24 hours of the day. It is only open for trading as from 1330GMT to 2030GMT, Monday to Friday. As such, trade decisions on the DJ30 asset must factor in this time frame.

The next step is for the trader to identify what factors lead to investors selling off their stock holdings, leading to a drop in the price of the DJ30 index asset. The performance of this index is tied to the following:

1) Manufacturing data

2) Employment data, especially the US Non-Farm Payrolls report.

3) Gross Domestic Product (GDP).

4) Consumer sentiment data.

7) Earnings reports, especially that of the financial services companies.

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8) Credit rating upgrades or downgrades.

9) War or terrorist attacks (e.g. 9/11).

10) State of the global economy.

Employment data are a very strong market mover. Whenever the Non-Farm Payrolls report and US employment rate data disappoint to the downside, the DJ30 is usually sold off hard. We saw this clearly displayed by traders after the last release on June 1, 2020. Manufacturing data are a measure of employment and will ultimately affect consumer spending. This is because increased manufacturing is a sign that the economy is picking up, will lead to more jobs, and more money in the pockets of its citizens. Consumer sentiment is a measure of how consumers view the state of the economy. Consumers spend more when the economy is good and they have jobs and more disposable income.

These are all factors that affect the decisions of investors as to whether to hold on to their stocks or to sell them off, and this is what affects the DJ30 index.

Trading the DJ30

The Option Builder binary options trade is a good way to trade the DJ30. The American exchanges are the last major exchanges to open after the Asian and European exchanges. As a result, investors would have been able to feel the pulse of the market. Traders can also monitor the news channels such as Bloomberg TV, as the analysis of the trade for the day will indicate where the index futures are likely headed. On Option Builder, the trader is trading the Up/Down binary option, and can set the expiry to a specific time. Usually the expiries can be set to a clock, with hourly intervals from 0000hrs to 2300hrs, and every 15 minutes from 00 – 15 – 30 – 45 – 60 minutes. You can therefore open the trade a few hours to the open of the DJ30 index asset, and set the expiry to 10 to 15 minutes after the market open.

Usually the index rises or falls immediately upon market open according to market bias. So set your trade with the Option Builder accordingly after getting the market sentiment for the day.

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In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

Outside the EU, financial products are offered by Binary (SVG) LLC, Hinds Building, Kingstown, St. Vincent and the Grenadines; Binary (V) Ltd, Govant Building, Port Vila, PO Box 1276, Vanuatu, regulated by the Vanuatu Financial Services Commission (view licence); Binary (BVI) Ltd, Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands, regulated by the British Virgin Islands Financial Services Commission (licence no. SIBA/L/18/1114); and Binary (FX) Ltd., Lot No. F16, First Floor, Paragon Labuan, Jalan Tun Mustapha, 87000 Labuan, Malaysia, regulated by the Labuan Financial Services Authority to carry on a money-broking business (licence no. MB/18/0024).

This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, Japan, or to persons under age 18.

The products offered via this website include binary options, contracts for difference (“CFDs”) and other complex derivatives. Trading binary options may not be suitable for everyone. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, the products offered on this website may not be suitable for all investors because of the risk of losing all of your invested capital. You should never invest money that you cannot afford to lose, and never trade with borrowed money. Before trading in the complex products offered, please be sure to understand the risks involved and learn about Responsible Trading.

In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, licensed and regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

In the Isle of Man and the UK, Synthetic Indices are offered by Binary (IOM) Ltd., First Floor, Millennium House, Victoria Road, Douglas, IM2 4RW, Isle of Man, British Isles; licensed and regulated respectively by (1) the Gambling Supervision Commission in the Isle of Man (current licence issued on 31 August 2020) and by (2) the Gambling Commission in the UK (licence reference no: 39172).

In the rest of the EU, Synthetic Indices are offered by Binary (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta; licensed and regulated by (1) the Malta Gaming Authority in Malta (licence no. MGA/B2C/102/2000 issued on 01 August 2020), for UK clients by (2) the UK Gambling Commission (licence reference no: 39495), and for Irish clients by (3) the Revenue Commissioners in Ireland (Remote Bookmaker’s Licence no. 1010285 issued on 1 July 2020). View complete Regulatory Information.

Binary.com is an award-winning online trading provider that helps its clients to trade on financial markets through binary options and CFDs. Trading binary options and CFDs on Synthetic Indices is classified as a gambling activity. Remember that gambling can be addictive – please play responsibly. Learn more about Responsible Trading. Some products are not available in all countries. This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, or to persons under age 18.

Trading binary options may not be suitable for everyone, so please ensure that you fully understand the risks involved. Your losses can exceed your initial deposit and you do not own or have any interest in the underlying asset.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.6% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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